Wealthy Valenciana Residents To Be Hit By Wealth Tax

Last year, the Spanish government reinstated wealth tax by cancelling the 100% credit that had applied since 2008. At the time, the Comunidad Valenciana (Valencia, Alicante an

Last year, the Spanish government reinstated wealth tax by cancelling the 100% credit that had applied since 2008. At the time, the Comunidad Valenciana (Valencia, Alicante and Castell? provinces), Islas Baleares and Madrid decided to continue to apply the credit, so that residents in these Autonomous Communities escaped the unpopular tax.

In June, however, the Valenciana government approved a measure to stop applying the 100% credit in its provinces, as part of its Financial Economic Rebalancing Plan. Once passed into law, residents will be liable to wealth tax for assets as at 31st December 2012, with the tax payable in 2013. The local government expects to raise around ?71 million of extra tax revenue as a result.

The economic plan also includes an increase in property transfer tax from 7% to 8% from 2013, and new environmental taxes.

Spanish wealth tax is payable by residents based on worldwide assets held at 31st December each year. Non-residents are liable on Spanish assets. The individual allowance is now ?700,000, and there is a main home allowance (not available to non-residents) of ?300,000. The progressive rates of tax range from 0.2% to 2.5%.

Consult Blevins Franks to establish if and how you will be affected by wealth tax and if there are steps you can take to lower your liability.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual must take personalised advice.